ReNew puts asset recycling at heart of growth strategy

The strategy is designed to serve two purposes: release capital locked into mature renewable assets for deployment into new projects, and progressively reduce leverage at a time when the Nasdaq-listed company has sizeable debt maturities over the next two years.

“The idea is to invest in assets, mature them with signed power purchase agreements (PPAs), exit and invest in new projects,” said a person familiar with the company’s plans. ReNew intends to commission around 3 GW annually and could sell up to 1 GW each year through 2030, the person said.

The approach is already visible in a series of transactions. ReNew recently agreed to sell 1.4 GW of operational renewable assets across Rajasthan and Karnataka to CESC, part of the RP Sanjiv Goenka Group, at an enterprise value of Rs 4,859 crore. On completion, the transaction is expected to reduce ReNew’s debt by around Rs 3,500 crore.

In March 2026, the company signed an agreement to divest its sole commissioned project in Tamil Nadu — a 100 MW/117.5 MWp solar facility — to Technique Solaire Group at an enterprise value of $49 million.

More transactions could follow. ReNew is working on a few asset sales that have yet to be announced, according to people familiar with the matter. These could include a 100 MW hydroelectric project in Uttarakhand and some of its smaller transmission assets.

The capital recycling assumes significance given the scale of ReNew’s balance sheet. As of June 30, the company had net debt of Rs 67,120 crore and gross debt of Rs 78,611 crore. It faces bond maturities of about Rs 5,600 crore in FY27 and Rs 3,300 crore in FY28, besides long-term debt maturities of around Rs 3,200 crore in FY27 and a similar amount in FY28.

Asset sales, however, are only one leg of the strategy. ReNew is also looking to refinance part of its borrowings and lower its funding costs. It is in talks for refinancing that could reduce its average cost of debt by 50-75 basis points, people familiar with the matter said. Its average cost of debt currently stands at around 8.9%, according to its latest investor presentation.

Earlier this year, ReNew raised an $800-million offshore loan to refinance debt associated with a hybrid power project, Bloomberg reported in March.

A third source of capital could come from the manufacturing business that ReNew has incubated. The business currently carries relatively low debt and could raise equity at some stage, which would also help lower leverage at the consolidated level, a person familiar with the plans said.

The strategy effectively allows ReNew to separate the economics of developing renewable projects from owning them indefinitely. Once projects are commissioned, de-risked and backed by long-term PPAs, some can be monetised and the capital redeployed into ReNew’s development pipeline.

That model also allows the company to continue expanding without funding all incremental growth through fresh borrowing. As of June 30, 2026, ReNew had a portfolio of 20.5 GW of renewable capacity, including 1.7 GW/6.2 GWh of battery energy storage systems. Including BESS, its operational capacity stood at 13.1 GW. Its solar module and cell manufacturing capacities were 4 GW and 2.5 GW, respectively.

In Q1FY27, ReNew’s net profit rose 16% year-on-year to Rs 595.3 crore, while total income increased 16% to Rs 4,786.4 crore.

The asset recycling strategy comes as founder, chairman and CEO Sumant Sinha and Canadian investor CPP Investments are seeking to buy out ReNew’s public shareholders in the US and take the company private, with a potential India listing subsequently.

The key question is whether the recycling programme can keep pace with ReNew’s growth ambitions. An analyst who did not want to be identified said net debt of about ₹67,000 crore and net debt-to-last-twelve-month adjusted Ebitda of roughly 5.7 times mean the company remains highly leveraged, leaving it exposed to interest costs and refinancing risks.

The analyst also pointed out that ReNew’s FY27 cash-flow-to-equity guidance of ₹1,800-2,200 crore partly assumes a 1 GW asset sale. This means capital recycling, rather than organic cash generation alone, remains an important source of funding for expansion.

People familiar with ReNew’s plans, however, argue that leverage needs to be viewed in the context of renewable-energy projects backed by PPAs of as long as 25 years. A debt-to-Ebitda ratio of around five to 5.5 times is therefore considered manageable for the business, they said.

ReNew’s debt service coverage ratio is around 1.4, which also provides adequate headroom to service borrowings, according to a person familiar with the company’s finances. The company’s ability to refinance $2-3 billion of debt annually is another indication of lenders’ comfort with its leverage, an analyst said.

The result is a model in which ReNew is seeking to use its balance sheet less as a permanent warehouse for operating assets and more as a platform for developing, maturing and selectively monetising them. The success of that strategy will depend on its ability to secure attractive valuations for mature assets while continuing to build new capacity without allowing leverage to outrun cash flows.

An email sent to ReNew did not elicit a response.

Capital play

• Targets commissioning of around 3 GW of capacity annually through 2030
• Could sell up to 1 GW of operational assets every year
• Recent 1.4 GW sale to CESC expected to cut debt by about ₹3,500 crore
• More hydro and transmission asset sales under consideration
• Refinancing could lower average borrowing cost by 50-75 bps
• Equity raise in manufacturing business could further ease consolidated leverage